A123 will replace all defective batteries made at the Livonia, Michigan plant

EV battery maker A123 Systems Inc. announced that it would be replacing all defective battery packs that were assembled in Livonia, Michigan for Fisker Automotive and other customers.

A123 said the replacement effort wasn't due to a safety issue, but it will spend $55 million on replacing all defective batteries made in the Livonia plant, which opened in 2010 after A123 received a $249 million grant from the Department of Energy and $125 million in state incentives.

A123 didn't specify all of the customers it plans to replace batteries for, but Fisker Automotive is definitely on the list. In December 2011, A123 found a safety issue with the batteries it provided to Fisker. More specifically, the hose clamps in the internal cooling system of the batteries were misaligned, which could cause coolant to leak. Furthermore, a coolant leak could lead to an electrical short circuit.

All seemed well after the fix, but earlier this month, Consumer Reports published a piece on its broken $107,850 Karma plug-in hybrid that it only had for a few days. The Karma, which had less than 200 miles on the odometer, became undriveable during a routine speedometer calibration test. The dashboard continuously flashed a warning message, and once parked, the Karma's transmission went into Neutral and wouldn't shift to any gear except Park and Neutral via its electronic shifter. Even after turning it off and restarting it, the Karma would only drive a few feet before doing the same thing.

The high-profile report caught sent some negative attention Fisker's way. After Consumer Reports sent its Karma to the dealer, it was discovered that the battery was the issue. According to the dealer, a "fault was found in the battery and inverter cable" and "both were replaced as a unit." Consumer Reports received its Karma back after one week, and said that it was "the first time in memory that we have had a car that is undriveable before it has finished our check-in process."

Now, A123, which supplies EV batteries to Fisker, will be replacing all of the auto company's batteries as well as batteries it has supplied to other customers for a grand total of $55 million.

"There are five transportation customer production programs that have received products from A123 that potentially have defective cells," said David Vieau, A123 CEO. "We have sufficient liquidity to fund this campaign, but expect this situation will require us to adjust our fundraising strategy."

Not only will A123 replace all of the batteries for Fisker's 2012 Karma, but it will also up the battery warranty from 50,000 miles to 60,000 miles -- but in North America only.

"The entire Fisker team is committed to the complete satisfaction of our customers and their experience with our vehicles," said Tom LaSorda, Fisker CEO. "As a new technology start-up company, we have stepped up to many challenges in our short history as we have launched one of the most advanced electric vehicles with extended range in the world."

Folks I have been one of the first customers of the Fisker Karma. I have to admit I have never had better service. I am an American and I believe in American products. I took a risk with the Karma because of its beauty, technological advance and the fact I would have a product that is a rare beast. I never had any issues with my battery, just the usual software glitches- which are intact less than the BMW 7 series and Porsche Panamera I had before. But the software upgrades have resolved these problems. Plus I have an extended warranty- I am a happy customer. The battery exchange is voluntary- I may not go for it as I have no issues with my battery. I love my Karma!